Chapter 33Strategic Planning in Retailing

RETAIL MANAGEMENT:A STRATEGICAPPROACH,

10th Edition

BERMANBERMAN EVANS EVANS

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Retail Strategy

The overall plan or framework of action that guides a retailerOne year in durationOutlines mission, goals, consumer

market, overall and specific activities, and control mechanisms

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Figure 3-1: Elements of a Retail Strategy

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Benefits of Strategic Retail Planning

Provides thorough analysis of the requirements for doing business for different types of retailers

Outlines retailer goals Allows retailer to determine how to differentiate itself

from competitors Allows retailer to develop an offering that appeals to a

group of customers Offers an analysis of the legal, economic, and

competitive environment Provides for the coordination of the firm’s total efforts Encourages anticipation and avoidance of crises

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Organizational Mission

Retailer’s commitment to a type of business

and to a distinctive role in the marketplace

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Figure 3-2: The Focused Organizational Mission of Frisch’s Restaurants

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Ownership and Management Alternatives

A sole proprietorship is an unincorporated retail firm owned by one person

A partnership is an unincorporated retail firm owned by two or more persons, each with a financial interest

A corporation is a retail firm that is formally incorporated under state law; it is a legal entity apart from its officers

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Figure 3-3: Checklist to

Consider When Starting a New

Business

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Figure 3-4: Checklist for

Purchasing an Existing Retail

Business

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Figure 3-5a: Selected Kinds of Retail Goods and Service Establishments

Durable Goods Stores:Automotive group

Furniture and appliances groupLumber, building, and hardware group

Jewelry stores

Nondurable Goods Stores:Apparel group

Food groupGeneral merchandise group

Gasoline service stations

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Figure 3-5b: Selected Kinds of Retail Goods and Service Establishments

Service Establishments (Personal):Laundry and dry cleaning

Beauty/barber shopsFuneral services

Health-care services

Service Establishments (Amusement):Movie theatersBowling alleys

Dance hallsGolf courses

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Figure 3-5c: Selected Kinds of Retail Goods and Service Establishments

Service Establishments (Repair):Automobile repair

Car washesConsumer electronics repair

Appliance repairs

Service Establishments (Hotel):HotelsMotels

Trailer parksCamps

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Image and Positioning

An image represents how a given retailer is

perceived

by consumers and others

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Positioning Approaches

Mass merchandising is a positioning approach whereby retailers offer a discount or value-oriented image, a wide or deep merchandise selection, and large store facilities

Niche retailing occurs when retailers identify specific customer segments and deploy unique strategies to address the desires of those segments rather than the mass market

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Figure 3-6: Niche Retailing by Hear Music

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Figure 3-7: Selected Retail Positioning Strategies

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Target Market Selection

• Three techniquesThree techniquesMass marketingConcentrated marketingDifferentiated marketing

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Figure 3-8: Jean-Philippe Patisserie: A Shop of Distinction

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Strategic Implications of Target Market Techniques

Retailer’s locationGoods and service mixPromotion effortsPrice orientationStrategy

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Figure 3-9: Developing an Overall Retail Strategy

Controllable Variables:

•Store location•Managing business

•Merchandise management and pricing

•Communicating with customer

Uncontrollable Variables:•Consumers

•Competition•Technology•Economic conditions

•Seasonality•Legal restrictions

RetailStrategy

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Table 3-4a: Legal Environment and Retailing

Store Locationzoning lawsblue lawsenvironmental

lawsdirect selling lawslocal ordinancesleases and

mortgages

Managing the Businesslicensing provisionspersonnel lawsantitrust lawsfranchise

agreementsbusiness taxesrecycling laws

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Table 3-4b: Legal Environment and Retailing

Merchandise Management and Pricingtrademarksmerchandise restrictionsproduct liability laws and lemon lawssales taxesunit-pricing lawscollusion lawssale pricesprice discrimination laws

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Table 3-4c: Legal Environment and Retailing

Communicating with the Customertruth-in-advertising and selling lawstruth-in-credit lawstelemarketing lawsbait-and-switch lawsinventory lawslabeling lawscooling-off laws

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Table 3-6: Sample Strategic Plan

Sally’s is a small, independently-owned, high fashion ladies clothing shop located in a suburban strip mall. It is a full-price, full-

service store for fashion-forward shoppers. Sally’s carries sportswear from popular

designers, has a personal shopper for busy executives, and has an on-premises tailor. The store is updating its strategic plan as a means of getting additional financing for an

anticipated expansion.

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Additional Concerns for Global Retailing

In addition to the strategic planning process:assess your international potentialget expert advice and counselingselect your countriesdevelop, implement, and review an

international retailing strategy

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Factors Affecting the Success of a Global Retailing Strategy

TimingA balanced international programA growing middle classMatching concept to marketSolo or partneringStore location and facilitiesProduct selection

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Figure A3-1: Factors to Consider When Engaging in Global Retailing